According to The Australian Financial Review today, after more than six years of construction and $55 billion of investment, Chevron's monster Gorgon liquefied natural gas venture in Western Australia has finally started production and is set to ship its first cargo next week.
The project, which is starting up more than a year late and more than $12 billion over budget, together with other new LNG projects starting production in the 2014-17 period, should ensure Australia overtakes Qatar as the world's biggest exporter of the fuel by about 2019.
While the collapse in oil prices has slashed expected revenues from Gorgon and cast doubt whether it will turn a profit in its early life, Chevron chief executive John Watson insisted Gorgon "will drive long-term growth and create shareholder value for decades to come."
Gorgon, owned 25 per cent each by ExxonMobil and Royal Dutch Shell, is only expected to reach its full capacity of 15.6 million tonnes a year by about mid-2017 after the second and third production units start and ramp up.
At full capacity an LNG tanker will load every 2-3 days, shipping fuel to Japan, China, India, and elsewhere around Asia. Japanese customers Osaka Gas, Tokyo Gas and Chubu Electric Power also own small stakes in the project.
The project is still expected to generate more than $440 billion in GDP over the next two decades and add about $69 billion to federal revenues, said Malcolm Roberts, head of the oil and gas industry association APPEA.
Four new LNG projects in Australia have now started up since 2014, with three more to come to complete a $200 billion investment boom that has created thousands of jobs since 2009, including almost 19000 at Gorgon alone.
The surge in Australian LNG output, from 40 million tonnes last year to more than 85 million by 2020, will take time to be absorbed by the market in Asia, where spot prices have fallen to their lowest for several years.